I move amendment No. 53:
In page 24, line 47, before "in excess of" to insert "or under Case III of Schedule D in respect of profits or gains from an office or employment held or exercised outside the State".
SECTION 14.
Amendment agreed to.
I move amendment No. 54:
In page 24, to delete lines 48 and 49 and substitute the following:
"(i) the aggregate of the amounts, if any, of the individual's income chargeable to tax under Schedule E and under Case III of Schedule D as aforesaid, or".
Amendment agreed to.
Amendment No. 55 not moved.
I move amendment No. 56.
In page 25, to delete lines 5 to 7 and substitute the following:
"(c) in paragraph (a) of subsection (2) of section 16—
(i) by the insertion of the following subparagraph after sub-paragraph (ii):
‘(iia) in respect of a subscription for relevant shares issued on or after the 17th day of June, 1993, the rendering of such services as are mentioned in subparagraph (ii) in respect of which an employment grant would have been made or a grant or financial assistance would have been made available, as the case may be, by an industrial development agency under one of the provisions mentioned in the said subparagraph (ii) but for the fact, and only for the fact, that the industrial development agency concerned was or is precluded from making such an employment grant or making available such a grant or financial assistance, as the case may be, by virtue of the fact that a grant or financial assistance had already been made by some other person,',
and
(ii) by the insertion of the following subparagraph after subparagraph (iiic) (inserted by the Finance Act, 1993): ".
Amendment agreed to.
Section 14, as amended, agreed to.
NEW SECTION.
I move amendment No. 57:
In page 25, before section 15, to insert the following new section:
"15.—Notwithstanding anything in the Income Tax Acts, the first £7,000 of dividend income shall be exempt from income tax for fulltime directors.".
This relates to the taskforce on small businesses. The Minister is unapologetic about all the things he did in his 1992 Finance Bill but, bit by bit, we are having some of these things ameliorated. The issue of dividend income for a very small focused number of entrepreneurs is worthy of special consideration. I am not talking about part-time directors, I am talking about people who have gone through the full gambit, given a personal guarantee to the bank, mortgaged their home, tried to create a few jobs, exposing themselves to all the risks and hazards of running a business. Basically, they should have a little perk which is that their dividend income up to £7,000 a year should be tax exempt. If the Minister wants to make it £5,000 or a smaller figure I will not object. That should be exempt from income tax. It is not a big measure, it will apply to a very finite group. It used to apply before and its reintroduction was recommended by the taskforce on small businesses. As we speak, the Minister for Enterprise and Employment is probably waxing eloquent in the Dáil Chamber on how much he is in favour of entrepreneurship. Everyone is in agreement with him. Yet, in this Chamber, with no media and few committee members, we can actually do something about this and I would ask the Minister to give this favourable consideration.
In 1992, the Government decided to abolish the scheme for two reasons. This scheme was brought in 1986 and was designed for a particular small group of directors who, I think are the people Deputy Yates would be talking about, but it was used by everybody. I can remember examples of cases, where everybody was a shareholder, everyone was director of the company and the whole workforce were on these reliefs. It was a good idea and a good scheme but it was abused massively and that is why it was abolished. There was no evidence that the relief had achieved its purpose and there was a major element of exploitation and abuse which generally took the form of income substitution by directors of clothes companies who would arrange for their fully taxable remuneration to be substituted or indeed replaced by tax free dividends. It was totally against the intention of the relief.
I brought in 21 reliefs but, unfortunately, we do not have enough time to debate them fully. I have decided not to go through all them in the Finance Bill and just take them as read. They are open to the same possibility of exploitation and abuse as the previous reliefs which would be on a wider scale as the proposed relief is not unlike the earlier one confined to manufacturing. I discussed this with the small task force and explained to them the difficulty and we moved on to do things in other areas. Again it is the old question, if one could do something for a small category and confine it to them it would be fine but, unfortunately, that is not possible. It is inevitably abused.
Is the Minister prepared to redraft it on the basis of confining it to certain groups of people?
It was drafted in that way in 1986. I said to the task force and small business that what we did in this year's budget was not the end, that we would work through the report and see what way we could help them. We must target our limited resources at the people taking the risk, not the entire workforce. It has not proved possible to target relief like this but there are many other things for that individual this year we have made the changes on business assets. We have assisted them in regard to capital acquisitions and capital gains tax.
Amendment, by leave, withdrawn.
Section 15 agreed to.